Each and every year during the twenty years leading up to this recession, small businesses generated 75-80% of all new jobs. This was a remarkable transition in our economy that created a fundamental shift in employment.
The Fortune 500 went from employing about 20% of all American workers in 1980 to less than 5% by around 2000. Small businesses grew to make up 50% of the GDP and 50% of all employment during this same period.
But rather than enact tax cuts, which is the best single stimulus for entrepreneurial activity in an economy, we are now obsessed with propping up the large corporations that have already seen their best days, and to artificially try to stimulate new industries that cannot exist one their own in the market without massive government subsidies (i.e., almost every business with any "green" theme). And we are going to pay for all of this through higher income taxes and a whole new class of taxes created by Cap and Trade.
Our inattention to what really benefits entrepreneurial economic development has had a devastating impact on jobs.
A small business bailout cannot succeed if it is an interventionist approach by Washington as we have seen in their approach to the auto industry, the banking industry, and who knows what next. We should not infuse tax dollars into targeted industries or businesses if we want to restart the small business job engine that created so much of our prosperity of the past 20 years.
The best small business "bailout" would be for Washington to do less -- much, much, much less -- than it is doing now. But, alas, I just do not think that such an approach is found anywhere in the paradigm of either political party in Washington.
The Fortune 500 went from employing about 20% of all American workers in 1980 to less than 5% by around 2000. Small businesses grew to make up 50% of the GDP and 50% of all employment during this same period.
But rather than enact tax cuts, which is the best single stimulus for entrepreneurial activity in an economy, we are now obsessed with propping up the large corporations that have already seen their best days, and to artificially try to stimulate new industries that cannot exist one their own in the market without massive government subsidies (i.e., almost every business with any "green" theme). And we are going to pay for all of this through higher income taxes and a whole new class of taxes created by Cap and Trade.
Our inattention to what really benefits entrepreneurial economic development has had a devastating impact on jobs.
The
ADP Small Business Report showed that 177,000 small business jobs were
lost in June of 2009.
"Despite a notable improvement over the first three months of the year, when monthly losses averaged 260,000, employment among small-size businesses is likely to decline for at least several more months. Since reaching peak employment in January 2008, small-size businesses have shed nearly 2.3 million jobs."In about eighteen months, small business employers shed as many jobs as the Fortune 500 did during the entire decade of of the 1980s.
A small business bailout cannot succeed if it is an interventionist approach by Washington as we have seen in their approach to the auto industry, the banking industry, and who knows what next. We should not infuse tax dollars into targeted industries or businesses if we want to restart the small business job engine that created so much of our prosperity of the past 20 years.
The best small business "bailout" would be for Washington to do less -- much, much, much less -- than it is doing now. But, alas, I just do not think that such an approach is found anywhere in the paradigm of either political party in Washington.
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